BOI: Taxing Foreign Exchange Gains

Companies promoted under the Board of Investment (‘BOI’) are frequently unfamiliar with the corporate income tax treatment on foreign exchange gains.

Keywords: Mazars, Thailand, Corporate Income Tax, BOI, Revenue Department, Foreign Exchange Gains

 17 July 2014

According to the agreement between the delegates of the Revenue Department and the Board of Investment dated 11 July 1990, gains on movements of foreign exchange rates shall be treated as revenue from carrying on the promoted business and thus exempted from corporate income tax only if it is recognised from the date that the promoted company began to recognise revenue from carrying on the promoted business.

Examples:

  • Foreign exchange gains which are recognised from a business operation which is related directly to the business promoted by the BOI, e.g. an export of a product, an import of a machine, tools, equipments and raw materials to be used under the promoted project.
  • Foreign exchange gains arising from a foreign currency loan. Note that the company must be able to demonstrate that the loan directly relates to the promoted project.
  • Foreign exchange gains on receivables arising from revenue generated from the promoted project.

Foreign exchange gains which cannot be identified as being derived from a BOI promoted project will be allocated between both the BOI and non-BOI business.

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